The first memecoin to surface on Avalanche, Snowdog DAO (SDOG), saw its value collapse by nearly 90% on Friday, in what many consider to be the largest rug pull on the platform.
Despite the loss of millions of dollars in investments, the SnowdogDAO team argues that the event was a “game-theory experiment” gone awry, rather than a rug pull.
Crashing bad
After only eight days on the market, SnowdogDAO, a decentralized reserve memecoin based on Avalanche, crashed tragically yesterday.
SDOG, which began as an experiment and ended with a massive repurchase, drew a lot of interest from the crypto world.
The game theory experiment was devised, according to the development team, to raise awareness about Snowbank.
“We thought that combining a decentralized reserve meme coin that would expire after eight days with the prospect of a massive buyback would generate interest and exposure for the Snowbank project,” the development team said.
The buyback
The huge buyback, which would be financed by assets obtained by the Snowdog treasury through mint sales, was to be the experiment’s pinnacle.
The treasury market value increased to $44 million in eight days, allowing holders to fight for a piece of the cash during the buyback.
Only 7% of the SDOG supply was eligible to be sold above market price before the repurchase, which the creators neglected to reveal to the community, or at least did not make explicit enough.
Snowdog built its own AMM based on Uniswap V2, moving all SDOG liquidity from Trader Joe, a popular Avalanche DEX, to minimize front running.
The buyback, on the other hand, flopped horribly within seconds of being live, with hundreds of consumers losing the majority of their money.
By exchanging SDOG for other cryptocurrencies, a single address made about $10 million, wiping off a fifth of the Treasury’s buyback capacity.
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